Saturday, June 14, 2008

2008 Charity Navigator Report: Big Salaries, Big Scandals and Reputational Value

The 2008 Charity Navigator Metro Report is out.  It makes me think about what is most valuable to nonprofit organizations.  Here is my conclusion (not at all earth-shattering, I admit):  The most valuable asset charities have is their reputations.  Reputations are so important that a Tampa, Florida nonprofit turned down a $300,000 grant from the Hillsborough County Housing Authority over concerns that a federal investigation of the county agency would have a negative impact on the Tampa nonprofit, according to a recent news report. 

A local nonprofit housing group, seeking to distance itself from Hillsborough County's troubled Affordable Housing Office, will turn down a $300,000 grant from the office. Board members of Rebuilding Together Tampa Bay, which rehabilitates substandard housing for poor people, voted to decline the grant because of publicity surrounding a federal investigation of the Affordable Housing Office. "Our reputation is very important to us and we don't want to take the money under any kind of cloud because we haven't done anything wrong," said Jim Clark, president of the group's board of directors.

Reputations are so important and harm to reputations so damaging (to potential sources of funding) that sometimes nonprofit advisors should act like wise old litigators -- don't raise an objection (in front of the jury -- donors) to a "bad question" (e.g., private inurement or other stupid board or insider behavior) if being right will do more harm than good (like cause donors to withdraw support rather than patting you on the back for being right).  New York charitiy reputations have been in the news recently.  Last Sunday's New York Post, for example reports that Nonprofit CEO's in New York have the highest salaries amongst nonprofit CEO's in the nation even though NY charities raise, on average, nearly the least amount of money.

New York's nonprofits pay their CEOs more than any other city in the country - but don't raise the most money, a study shows. The median salary for running a New York nonprofit is about $169,000, putting the Big Apple nearly $15,000 ahead of second-place San Diego in CEO pay. But New York - which has 575 large charities - scored only fifth out of 30 major cities in median annual fund-raising. Groups here collected $4.8 million each, far behind the $6.2 million raised by charities in Detroit, according to the report by Charity Navigator.

Another New York Post story reported yesterday details the story of Big Apple's decision to "yank" 43 contracts to nonprofits, as the city investigates a City Council "slush fund" used to direct taxpayer money to city council members' favorite causes.  Even clean nonprofits have been caught up in the scandal:

The city has yanked contracts to four nonprofit groups whose grants were frozen in April as part of a broader investigation into the City Council's slush-fund scandal, The Post has learned. Among the organizations rejected for council funding is the Metropolitan New York Coordinating Council on Jewish Poverty, a well-respected nonprofit that was given $600,000 from the council in fiscal year 2008.

On the other side of the coast, residents of San Diego generally approve of the work that nonprofit agencies do in their communities, according to a report in the San Union-Tribune.

Eighty-six percent of people surveyed in the University of San Diego analysis said they have a “great deal” or “fair amount” of confidence that the region's charities effectively provide quality services. The number far exceeds the findings of a national study released in April, which said 64 percent of Americans share that same level of confidence in nonprofits. Local experts were at a loss to explain the difference.

On the other hand, charities in Miami garnered the highest ratings this year according to a Charity Navigator report. 

Miami has unseated San Diego to win the title of most charitable city in the United States, according to a new report. The Florida metropolis topped the list in the sixth annual report by charity evaluator Charity Navigator in New Jersey, which compared the median performance and size of the largest nonprofit organizations in 30 metropolitan markets. San Diego, Houston, Pittsburgh and Boston ranked among the top scorers, while Detroit, Indianapolis, Baltimore and Charlotte lagged at the bottom of the list. "It appears the strength of a charity reflects the local economy, and people in Miami are investing in charities right now because they're in a pattern of growth," researcher Sandra Miniutti said in an interview.

I guess the old statement is true even with respect to nonprofit:  "all politics are local."  The complete Charity Navigator Report is available online here.  Here are the factors evaluated in the report (the topics below are not linked -- go to the full report to access the links):


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